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Paid-for stuff likely to triumph over free – shock report

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Over-the-top (OTT) video services such as Netflix, LoveFilm and Sky's Now TV are likely to win out over free and ad-supported services, according to a recent report on streaming media.

Pay TV broadcasters, meanwhile, are already feeling the pinch as viewers cut back on subscription packages.

The report also notes that internet video, which had been "initially interpreted as a free alternative to traditional TV", is moving increasingly towards a pay model.

Video choices have changed enormously in the past year, with OTT players entering the UK market and hastening the demise of the high street DVD shop. And the debate about whether traditional platforms like BSkyB would suffer was shortlived - as Sky turned itself into an OTT player too, turning many of its bundled TV offerings into pay-as-you-go internet services. Even YouTube has put an oar into the PAYG/movie-rental biz.

The last year has also seen distributors of other people's stuff begin to invest in their own, including Netflix and Google's YouTube.

Fifty-nine per cent of consumers already spend less on traditional cable/satellite bundles, according to a survey of both punters and executives by Unisphere for the industry site StreamingMedia.com. Nevertheless two-fifths of executives think paid-for OTT video will prevail in five years.

The same number think ad-supported or sponsored services will still be around, a healthy niche in the market. A third said they think that pay TV will increasingly absorb OTT services and include them in the paid-for bundle.

It's hardly earth-shattering stuff, but does confirm that the willingness to pay for content is alive and well and driving the market.

Sky moved quickly to turn its offerings into an OTT package for people who don't have a satellite dish or take the Sky platform via cable. It has also increased its pay-as-you-go offerings for people who just want one-off films or sporting events.

Gaining the content rights for multiple devices is still seen as the biggest business challenge - but operators are also worried about bandwidth caps. These are expensive - as BT's splurge on football has shown.

The paper can be found (registration required) here (PDF). ®

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